Archive for June 4, 2010

The following appears in the June 4-10 issue of the Long Island Business News:

In a recent meeting held to discuss suburban problems, the county executives of Nassau, Suffolk and Westchester agreed that unfunded state mandates are consuming too big a share of their budgets. Nassau’s Ed Mangano, speaking for the group, said, “None of us can afford one more unfunded mandate. We want to make that clear.”

For years governors and state legislators have been evading the responsibility of funding programs they wanted by ordering municipalities and school districts to provide and pay for a host of services. To comply with these unfunded mandates, local governments are forced to raise billions in taxes. This, in part, explains why New York’s local per capita taxes are the highest in the nation.

Studies have revealed that New York imposes more mandates than any other state – over 2,000. These mandates consume on average 60 percent of county government budgets.

The Citizens Budget Commission has explained that the main reason for the crippling level of taxation is state policies on Medicaid, education and collective bargaining between unions and local governments.

The Manhattan Institute’s E.J. McMahon agreed: “What this underscores is that the problem we have is a four-letter word: cost. The costs are driven primarily out of Albany, by the state Legislature and the governor. But though the costs are dictated by Albany, Albany does not have to foot the whole bill; that’s the main problem. All they do in Albany is cash the campaign contributions from all the interest groups that benefit from their spending, primarily the unions.”

Medicaid is the poster child for unfunded mandates. Created during the “Great Society” heyday, Title 19 of the Social Security Act of 1965 established guidelines for a Medicaid program that states could adopt to provide medical services for the poor. The federal government would cover half the cost and the states would have to pay the other half.

New York quickly signed on to the program, added numerous amendments that made dependency a way of life and decreed that Albany would pick up only half the state’s portion of Medicaid costs; the rest of the financial burden would have to be shouldered by local governments. As a result, today the average New York county devotes about half of its property taxes to covering its imposed share of Medicaid costs. In Nassau County, the local share of Medicaid is nearly $250 million annually, in Suffolk $230 million – roughly 30 percent of their property tax collections.

The other cause of local government’s skyrocketing cost: New York’s public sector labor laws.

With employee salaries and benefits accounting for about 75 percent of municipal and school district operating expenses, possessing the power to effectively negotiate fair contracts is essential. Unfortunately this is not the case in New York. Over the years the state Legislature, succumbing to the demands of public employee unions, has enacted legislation that puts municipal employers at a disadvantage at the bargaining table.

Here are a few examples: The Public Employee Relations Board hinders municipal employers from implementing cost-saving policies such as subcontracting of services. The Triborough Amendment forbids employers from altering “terms and conditions of employment” after a contract has expired. As a result, teacher unions, for example, have no incentive to seriously negotiate since their members are guaranteed pay increases even in the absence of a contract.

These and scores of other laws, rules and regulations that favor municipal unions explains why the average salary of government workers is higher than private sector employees and why government benefits exceed those in the private sector.

Because time after time Albany’s “powers that be” have, for short-term political advantage, forced mandates without regard to potential consequences, New York’s local governments and school districts are on the edge of a fiscal abyss.